Shares of the world’s largest oil services provider, Schlumberger Ltd. (NYSE: SLB – $44.21), are higher by about 7% after reporting revenue of $8.18 billion for the fourth quarter, about equal to last year’s total, but beat analysts’ average estimate of $8.04 billion. Revenue from its North American business rose marginally to $2.82 billion, while international revenue rose nearly 1% to about $5.28 billion with gains in the Middle East and Asia offsetting weakness in Europe and Latin America. By business segment, Reservoir Characterization revenue was up 1% from last year; the Drilling unit was up 13%; Production negative by 5%; and the Cameron equipment business was lower by 11%. Schlumberger, a bellwether for the oilfield services sector, said recent volatility in crude prices have led to more uncertainty in the spending outlook for oil and gas producers. However, an improved supply-demand balance and cuts by OPEC and Russia could lead to a gradual recovery in oil prices in 2019. The Houston-based company reported a net income of $538 million and excluding one-time items, earned $0.36 cents per share, in line with analysts’ estimates and compared to $0.48 in the fourth quarter of 2017. For the full-year, SLB earned $1.65 per share on an adjusted basis compared to $1.50 in 2017. If oil prices continue to stabilize, average Street estimates for 2019 are at $1.78 per share, with a wide-range of views from $0.95 to $2.34.
Patient investors looking for a stake in the energy sector might want to look closer at Schlumberger as longer-term results appear quite positive for the beaten down shares. And the $2.00 annual dividend, yielding 4.5%, sweetens the pie as we wait this one out.